| With the rapid development and expansion of the company in recent years,solving the problem of funds has become the top priority,and traditional bank loans are difficult to meet the company’s demand for funds.Due to the low cost,simple procedures,and rapid financing,it has become an important choice for major company.Since the policy liberalized equity pledge business in 2013,the business has developed rapidly in China,and the equity pledge rate of many company controlling shareholders has reached 100%.While the equity pledge is popular in the capital market,the regulatory authorities’ supervision policies for equity pledge and the company’s rules and regulations on equity pledge did not keep up with the pace of its development,and various risk problems have come one after another.After 2015,China’s capital market has witnessed a series of companies "bursting positions" due to equity pledge.Therefore,a series of problems caused by equity pledge have brought huge economic losses to the company and small investors,and even affected the stability of the capital market.It is enough to show that the equity pledge system is not perfect,so it is essential to study this theme."One Big Share Alone" and "excessive equity concentration" are the commonality of listed companies in our country.Therefore,the controlling shareholder as the research object is more meaningful to our country’s capital market,so this article selects Qumei Home Furnishings Group Co.,Ltd as a case to study motivations and economic consequences of the controlling shareholder equity,so as to promote the steady operation of the capital market.This thesis reviews the domestic and foreign theories on the motivations and economic consequences of equity pledge through literature research,and states the theoretical basis for the research content.Secondly,it briefly describes the basic situation of Qumei Home and combs the process of equity pledge.Then analyze the motivations and economic consequences of equity pledge by major shareholders,and at the same time analyze the method of reducing equity pledge rates and existing problems.It analyzes the motivations of equity pledge from the theory of former people and corporate strategy.From the economic perspective to analyze the results of equity pledge,calculate and compare the separation of the two rights of the controlling shareholders before and after the equity pledge,using event study method to analyze the impact of equity pledge on short-term stock price,using the method of economic value added method to analyze the impact of equity pledge on the long-term value of the company,through financial indicators to analyze changes in the company’s operating performance,and using Z-score model to judge the financial risk of the company.Finally,this thesis summarizes the research content and purpose,and puts forward reasonable suggestions.Through studying this thesis,the following conclusions: The motivations of the company’s equity pledge may be due to the shortage of internal funds within the company,limited external financing channels,support the strategic development of the company and maintain the control of the company.According to the analysis of the economic perspective,it is found that equity pledge will not only lead to the separation of control rights and cash flow rights,but also bring negative impacts on the company’s short-term stock price,long-term company value and company performance,and cause certain financial risks.The company uses a bank loan with strategic investors,targeted issuance,uses the company’s operating net cash flow repayment and low interest rates to set up the pledge of equity for equity,thereby reducing the equity pledge rate of controlling shareholders.However,the opportunity cost of these four methods higher and diluted the control of the company,the accompanying issues are worthy of attention and thinking.In the end,this thesis makes suggestions for the relevant parties.For the results of the study,the listed company should enhance the prudence in strategic development and rationally optimize the company’s ownership structure.For small and medium investors,they should invest rationally and pay close attention to the behavior of controlling shareholders after equity pledge.For regulators,they should improve information disclosure mechanism and relevant laws and regulations. |
